Perturbations of cell hydration as provoked by changes in ambient osmolarity or under isoosmotic conditions by hormones, second messengers, intracellular substrate accumulation, or reactive oxygen intermediates critically contribute to the physiological regulation of cell function. In general an increase in cell hydration stimulates anabolic metabolism and proliferation and provides cytoprotection, whereas cellular dehydration leads to a catabolic situation and sensitizes cells to apoptotic stimuli. Insulin produces cell swelling by inducing a net K+ and Na+ accumulation inside the cell, which results from a concerted activation of Na+/H+ exchange, Na+/K+/2Cl- symport, and the Na+/K(+)-ATPase. In the liver, insulin-induced cell swelling is critical for stimulation of glycogen and protein synthesis as well as inhibition of autophagic proteolysis. These insulin effects can largely be mimicked by hypoosmotic cell swelling, pointing to a role of cell swelling as a trigger of signal transduction. This article discusses insulin-induced signal transduction upstream of swelling and introduces the hypothesis that cell swelling as a signal amplifyer represents an essential component in insulin signaling, which contributes to the full response to insulin at the level of signal transduction and function. Cellular dehydration impairs insulin signaling and may be a major cause of insulin resistance, which develops in systemic hyperosmolarity, nutrient deprivation, uremia, oxidative challenges, and unbalanced production of insulin-counteracting hormones. Hydration changes affect cell functions at multiple levels (such as transcriptom, proteom, phosphoproteom, and the metabolom) and a system biological approach may allow us to develop a more holistic view on the hydration dependence of insulin signaling in the future.